Rivergum Homes Restructures to Focus on Medium-Density Projects Amid Industry Challenges
Rivergum Homes, a prominent South Australian home builder, has announced a strategic shift in its business operations, moving away from traditional detached housing to concentrate on medium-density projects. This restructuring aims to address the growing demand for affordable housing and aligns with government objectives to increase housing availability in South Australia.
Transition to Medium-Density Housing
Established over 30 years ago by Victor Said, Rivergum Homes has been a significant player in the construction of traditional detached houses, completing hundreds of new homes annually. However, in a recent restructure, the company has ceased accepting new orders from individual customers. Instead, it will focus on partnerships with developers to deliver infill and medium-density housing projects across Adelaide. This strategic pivot is designed to better utilise resources and support governmental efforts to increase housing supply.
Rivergum Chairman Roger Zammit confirmed that this transition resulted in five redundancies within the sales team. Nevertheless, the company plans to complete approximately 270 existing individual customer projects before fully exiting the retail business. Zammit emphasised that the majority of staff would be redeployed to the medium-density sector, anticipating further growth and additional hiring in this area. Adelaide Now
Current and Upcoming Projects
Rivergum Homes has secured significant projects to bolster its medium-density portfolio. Notably, the company acquired land at the former TAFE site in Panorama, earmarked for over 50 townhouses. Additionally, Rivergum won a contract to deliver 30 townhouses for MAB Corporation at the former Brompton Gasworks site. These developments are part of a robust pipeline exceeding 1,000 residences, with plans to announce an additional 200 units in the next six months. Adelaide Now
Industry Context and Challenges
The Australian housing construction industry is currently facing unprecedented challenges, including bureaucratic delays, community opposition to developments, financial hurdles, and increasing construction costs. These issues have made it increasingly difficult for builders to undertake new projects, prompting companies like Rivergum Homes to adapt their strategies to remain viable and meet market demands. theaustralian.com.au
The Role of Construction Lending
In the context of Rivergum's strategic shift, construction lending plays a pivotal role in facilitating medium-density housing projects. Construction loans, also known as building loans, provide the necessary capital to fund building projects, offering flexibility through progressive drawdowns or progress payments. This means funds are released in stages as different milestones are achieved during construction, allowing for better cash flow management. canstar.com.au+2nab.com.au+2ANZ Bank+2canstar.com.au
Several Australian financial institutions offer construction loans tailored to the needs of developers and builders:en.wikipedia.org+10loans.com.au+10ANZ Bank+10
National Australia Bank (NAB): Offers construction loans with interest-only payments during the building phase, providing flexibility and potential interest savings. dailytelegraph.com.au+2ANZ Bank+2commbank.com.au+2
Commonwealth Bank of Australia (CBA): Provides construction loans with interest-only payments during construction, reverting to principal and interest repayments upon completion. canstar.com.au+2commbank.com.au+2ANZ Bank+2
ANZ: Offers construction loans that allow for progressive drawdowns to pay builders at key stages, with interest-only repayments during the building phase. ANZ Bank+1nab.com.au+1
These financial products are essential for developers undertaking medium-density projects, as they align funding with the construction timeline, reducing financial strain and aligning with project cash flows.
Conclusion
Rivergum Homes' strategic realignment towards medium-density housing reflects a proactive approach to evolving market conditions and industry challenges. By focusing on partnerships with developers and leveraging construction lending options, the company aims to contribute effectively to addressing South Australia's housing needs while navigating the complexities of the current construction landscape.
